INCOME TAX OFFICER WARD 4(2)(1), AHMEDABAD, AHMEDABAD V. ALPESH MANHARLAL MISTRY , AHHMEDABAD

ITA 777/AHD/2025

AI Insights

The case involves the Income Tax Officer (ITO) appealing against the decision of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi, which had favored the assessee, Alpesh Manharlal Mistry. The ITO had initially made an addition to the assessee's income, treating investments in penny stocks as unexplained under section 69 of the Income Tax Act, 1961. The CIT(A) reversed this decision, leading to the ITO's appeal. The Tribunal's decision was based on the absence of evidence of any price rigging or collusion in the stock transactions, and the fact that the transactions were conducted through proper channels and involved payment of Security Transaction Tax (STT).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 717626 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 11-04-2025
• Other Referred Cases: Ziauddin A Siddique vs. Income Tax, Rajnikant Prabhudas Mandavia vs. ITO, Renu Aggarwal vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence; Reassessment proceedings; Corroborative evidences; Unexplained investment; Accommodation entries; Transactions in derivatives; Bogus
• Section: 148; 144; 142(1); 69

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH Before: Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member The ITO, Ward-4(2)(1), Ahmedabad (Appellant) Vs Alpesh Manharlal Mistry A/53, Iswarkakanagar Society, Nr. Kanal Tenament, Chandlodiya, Ahmedabad-382481, Gujarat PAN: ASDPM6957D (Respondent) Revenue Represented: Shri Abhijit, Sr.D.R Assessee Represented: None Date of hearing : 07-08-2025 Date of pronouncement : 12-08-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Revenue as against appellate order dated 09.01.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the exparte reassessment order passed under section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2012-13. ITA No. 777/Ahd/2025 Assessment Year: 2012-13 Printed from counselvise.com I.T.A No. 777/Ahd/2025 A.Y. 2012-13 Page No ITO Vs. Alpesh Manharlal MIstry 2 2. The registry has noted that there is a delay of 11 days in filing the above appeal. It is explained that the assessing officer by way of a Notarized Affidavit explained the delay due to administrative reasons and obtaining necessary approvals has caused the delay of 11 days in filing the above appeal. We are satisfied with the above reasons explained and thereby the delay of 11 days in filing the appeal is hereby condoned. 3. Brief facts of the case is that the assessee is an individual who is in the business of job work of wooden furniture. The total income of the assessee is below basic exemption and is not required to file Return of Income. The assessee opened a demat account with the intent to earn short term gain. The assessee undertook trading in equity and F&O through the demat wherein he has invested in the stocks of VMS Industries along with other stocks i.e. assessee purchased 4000 shares of VMS Industries for Rs.149964.65 and sold them at 148327.50 resulting in a loss of Rs. 1637.15. Likewise in all other transaction, there is some loss resulting in total loss from share transaction Rs.41,438.95 and loss from F&O amounts to Rs. 36,969/-. The assessee thus not carry forward and set off the losses incurred in the above transaction by filing the Return of Income. 4. Taking note of the purchase of shares of VMS Industries which is said to be a penny stock, the assessment was reopened by the A.O. by issuing notice u/s. 148 of the Act on 29-03-2019 based on the information received from the Investigation Wing. However assessee has not filed any return of income, therefore notice u/s 142(1) was Printed from counselvise.com I.T.A No. 777/Ahd/2025 A.Y. 2012-13 Page No ITO Vs. Alpesh Manharlal MIstry 3 issued on 07-09-2019. The assessee failed to reply to this notice also, which resulted in passing exparte assessment order, thereby the investment in stocks pertain to VMS Industries Ltd. amounting to Rs.1,48,488/- is taxed u/s 69 of the Act as unexplained and demanded tax thereon. 5. Aggrieved against the assessment order, the assessee filed an appeal before Ld. CIT(A). During the appellate proceedings, the assessee submitted that copy of the summary and share transaction and F&O summary with supporting evidences. Thus the submissions made by the assessee being fresh evidences, Ld. CIT(A) called for Remand Report from the assessing officer under Rule 46A of the I.T. Rules. The Assessing Officer objected to the admission of additional evidences since the same are not covered under the four boundaries as envisaged in Rule 46A. However the Ld. A.O. has not offered any comments on merits of the case by stating that sufficient opportunities were given to the assessee during the reassessment proceedings. The Ld. CIT(A) after considering the rejoinder from the assessee deleted the addition and allowed the appeal in favour of the assessee by observing as follows: “6. Decision; The Bombay High Court in the case of Ziauddin A Siddique in Income Tax Appeal No. 2012 of 2017 dated 04.03.2022 held that, there is a finding of fact by the Tribunal that the transaction of purchase and sale of the shares of the alleged penny stock of shares of Ramkrishna Fincap Ltd. (\"RFL\") is done through stock exchange and through the registered Stock Brokers. The payments have been made through banking channels and even Security Transaction Tax (\"STT\") has also been paid. The Assessing Officer also has not criticized the documentation involving the sale and purchase of shares. The Tribunal has also come to a finding that there is no allegation against assessee that it has participated in any price rigging in the market on the shares of RFL. Therefore we find nothing perverse in the order of the Tribunal. In of Rajnikant Prabhudas Printed from counselvise.com I.T.A No. 777/Ahd/2025 A.Y. 2012-13 Page No ITO Vs. Alpesh Manharlal MIstry 4 Mandavia (I.T.A. Nos. 401&402/Ahd/2019) dated 25.09.2023 ITAT Ahmedabad dismissed revenue's appeal by stating that no material has been brought on record to suggest that assessee was involved in any price rigging and nor has the case of assessee mentioned in the list of beneficiaries, by the persons whose statements were recorded. In the statements recorded, the name of the assessee as a beneficiary was not specifically mentioned as noted by Supreme Court in the case of Renu Aggarwal (153 taxmann.com 579). In the instant case the appellant has submitted evidences showing normal share trading through a broker and incurring minor losses in the alleged penny stock trading. There is nothing to show that there has been collusion or connivance between the broker and the assessee for the introduction of his own unaccounted money. There is nothing in the documents or any statement to show that the appellant in this case was involved in price rigging other that he purchased and sold the share in the normal course of trading. As per above decisions transaction of purchase and sale of shares supported by demat statements cannot be treated as bogus. As a result, the appeal is allowed.” 6. Aggrieved against the appellate order, the Revenue is in appeal before us raising the following Grounds of Appeal: (a) The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,48,488/ made by AO on account of unexplained investment in Penny Scrip M/s. VMS Industries Limited u/s. 69 of the IT Act, despite the fact that: (1) The credible information was received from Investigation wing that the assessee has traded in Penny Scrip M/s VMS Industries Limited and received accommodation entries. (ii) During the assessment proceedings, the assessee had failed to furnish any supporting documents to establish its claim and ex-parte order u/s. 144 r.w.s. 147 of IT Act was passed by assessing officer. (iii) During the remand proceedings, the AO had filed objection against admission of additional evidences filed by assessee before Appellate authority, as the case is not covered under Rule 46A of IT Rules 1962. (b) The appellant craves leave to add, alter and/or to amend all or any the ground before the final hearing of the appeal. 7. During the course of hearing, None appeared on behalf of the assessee in spite of service of notice. Heard the submission of Ld. Sr. D.R. The only addition made by the assessing officer in this case is Rs. 1,48,490/- which is no doubt below taxable income Printed from counselvise.com I.T.A No. 777/Ahd/2025 A.Y. 2012-13 Page No ITO Vs. Alpesh Manharlal MIstry 5 relating to Asst. Year 2012-13. Further Ld. CIT(A) has considered the submission of the assessee, perused the documents produced by the assessee namely the summary of purchase and sale of share and F&O summary, wherein loss of Rs.41,438.95 and Rs.36,969 incurred by the assessee which was also not been set off as carried forward by filling Return of Income. Further we noticed when the Ld. CIT(A) called for a Remand Report, the assessing officer has not adduced comments on the additional documents filed by the assessee, but rather directed the Ld. CIT(A) not to entertain the additional evidences, which in our considered opinion is against the provisions of the Act of Rules. Further it is noticed from the reassessment order, the only taxable income is Rs.1,48,490/- which is below taxable income relating to the Asst. Year 2012-13. Thus, we have no hesitation in confirming the order passed by Ld. CIT(A). Thus the appeal filed by the Revenue is hereby dismissed. We further observe that the Revenue has made this unwanted appeal before this Tribunal and the Revenue should be take into account, proper facts and figures before filing any such vexatious appeal. 8. In the result, the appeal field by the Revenue is hereby dismissed. Order pronounced in the open court on 12 -08-2025 Sd/- Sd/- (NARENDRA PRASAD SINHA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 12/08/2025 Printed from counselvise.com I.T.A No. 777/Ahd/2025 A.Y. 2012-13 Page No ITO Vs. Alpesh Manharlal MIstry 6 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद Printed from counselvise.com "